Saturday, March 10, 2018

How can we solve the Housing Crisis?

I sent this tweet on March 5th while listening to the Today Programme:

How will Labour build houses?" Asks John Humphrys on #r4today
"Allow Councils to borrow" says John Healey MP (Lab)
"More borrowing" intones John Humphry doubtfully

That's how we get houses John. 
It's called a "mortgage".

This is my most successful tweet ever, with 751 retweets, and seen in total by 101,693 people so far, producing 69 replies, the great majority positive, emphasising the  cost-effectiveness of building council housing because it produces rent for councils.

In my book Bills of Health I showed that building housing is 10 (ten) times more effective in financial terms alone  than putting people in temporary accommodation - the human benefits come as a bonus.

Homelessness has surged in public consciousness due to the cold weather and the actions of Windsor Council in trying to cleanse their streets of homeless people for the wedding of Harry Windsor and Meghan Markle.

The British Government is failing long and hard over housing.

The sole reason for Government to exist is to provide security to its citizens. Security means meeting the basics of life - food, water, energy, housing, healthcare and waste disposal, and protecting us from violence.

If people do not have enough food, they riot. If people do not have enough housing, they just get angry, get depressed and get ill. Successive Governments, Labour and Conservative, have failed, and are still failing, to fulfill their basic duty. Access to housing is a human need, and a country that denies its citizens their basic human needs does not deserve to be called "civilised".

It is not just the effect of inadequate housing on the nation's health and morale; homelessness makes no financial sense either, as we shall see.

The British Government has got to provide housing , and provide it fast.

So how do we do it?

Let's start with the homelessness problem, which is manifest as rough sleeping, in the bags and beggars on our streets, but also is hidden in overcrowding and sofa-surfing - all of which have serious health implications.

There is an amazingly effective answer to homelessness. It is to provide accommodation for the homeless. This is called Housing First, and has been implemented in the USA, with good results.

Housing for the homeless can be innovative and inexpensive.

We can re-purpose unused properties of many different kinds - empty houses,  offices, even warehouses and shipping containers.

The title "Housing First" correctly implies that there is more to the problem of homelessness  than simply providing shelter. Any development that brings a number of homeless people together will need support workers to help with social, health and psychiatric problems. There will need to be community self-regulation to overcome inevitable relationship problems. All these needs can be met, and overall, providing adequate and decent housing has got to be good for society as a whole, a prudent use of money, and a good investment.

In addressing the problem of homelessness, we give ourselves a model for addressing the housing problem generally. There are more empty properties in the UK than there are homeless families. There is sometimes a good geographical match between all of the available properties and the people in need. The problem lies in opening up the properties.

Squatting used to be the direct action response to the empty property until the Conservative Government foolishly made it an offence under the Legal Aid, Sentencing and Punishment of Offenders Act 2012. This Act needs to be amended to allow squatting again, and if Government is unwilling to do this, they should at least make it easier for local authorities to use Empty Dwelling Management Orders (EDMO).

Houses are left empty for a variety of reasons, ranging from being condemned as unfit on environmental health reasons, to situations where a divorced couple are unable to agree what to do with the house.

Any empty property has a depressing effect on the locality, but if it is in a terrace, it has a physically destructive effect, as the empty property succumbs to damp and rot, which begins to spread to its neighbours.

The effect of the EDMO is that the local authority takes over the care of the building, without affecting the property claims of the owner - whoever that may be, and sometimes that is impossible to establish. It doesn't matter who the owner is - it is being neglected, and it will be brought back into use. If the owner wants to take over the use again, they will have to foot the bill for the improvement works.

Predictably, the right wing Press opposed the EDMO, with the Express screaming hysterically that The State was going to seize 250,000 homes and the Sunday Times wailing that Britain had turned into a Communist State. As a result of this opposition EDMOs have only been severely under-used, at a rate of about 10 a year, because it is a complex and expensive process for local authorities to carry out. The rules for an EDMO need to be streamlined, and the right wing press needs to be told to grow up.

Self-build is the next step. Many people are capable of building their own homes using low impact materials like wood, rammed earth and straw, and these should be encouraged and facilitated instead of being seen as examples of weirdness. Co-housing should also be facilitated in whichever ways may be possible.

We need to free up unused living space, but the Bedroom Tax was a clumsy and cruel way of trying to do this. Rather than the coercive approach adopted by the Conservatives, we need to look at ways of making downsizing more easy and attractive, by assisting people in their decision, assisting them in their house move, and offering lower housing costs for single people who move voluntarily into smaller accommodation.

Finally, having looked at all the low cost and innovative options, we can start looking, very briefly,  at house building in the conventional sense.

There are big issues about the inclination of corporations to buy up and hold possible building land a process called land banking. The longer they hold it, as demand for housing grows, the more the value of their asset grows. Land Value Tax would help to put an end to this selfish behaviour.

Brownfield sites are preferable to greenfield from an environmental point of view, but less attractive from a commercial point of view. This is a good reason for Local Government to get back into the business of building council housing.

So finally, we arrive at the major solution to the lack of housing: Local Government builds enough houses for all its citizens (and also guests), and takes a rent.

Council housing was sold off in the 1980s for ideological reasons. The Conservative view is that it is wrong for Government to involve itself in the business of building houses and renting them out cheaply. So they sold them off to the sitting tenants, which in itself is not objectionable, since there are advantages to owning your home as opposed to renting. What was objectionable was that Councils were not allowed to use the money for council housing  sales to build new houses. Instead, the Conservative mantra was that "The Market Will Provide". History proves that the market did not provide.

The graph shows a falling trend in house-building since 1965, with an 8-year increase after the 1980 Housing Act, another increase under the Blair Government, followed by a sharp decrease caused by the Banks Crash of 2008-9. Despite the recent increase, we now see the lowest rate of house building in peace time since the 1920s.

Even worse, about one third of the houses sold have been sold on again to landlords, which was not quite the original idea. Or then again, maybe it was...

So we need a new burst of Council house building. It needs to be well-designed, with high energy efficiency, and well maintained but with maximum freedom for tenants to choose their own colour scheme.

How will this be paid for?

This brings us back to the interchange between the Johns Humphrys and Healy at the beginning of this post. To  Humphrys, paid £600,000 a year, the idea of borrowing to purchase a house is totally alien. If he needs another house, he can pay cash. To a Conservative megaphone like him, Government borrowing is by definition totally wrong - even though borrowing is how money is created. To Humphrys, Government should not have any money, except obviously for things like Trident, spy cops and prisons, and even then, he would be in favour of private prisons.

In the real world, Councils can borrow. My own Local Authority, North Somerset District Council, has just closed a deal to borrow £30 million to buy a Retail Park on which they hope to make a fat profit to feed back in the Council's finances, assuming the market holds steady. So a Council is in fact allowed to borrow to invest.

In the same way, Councils should be allowed to borrow to invest in the well-being of the people they exist in order to serve. In providing Council housing that meets the needs of all the population (not just the richest decile) they are helping the morale of everyone. They are reducing the burden on the NHS, since 6% of the NHS clinical budget is swallowed up in trying to treat conditions caused by inadequate housing. They gain an income from housing rent, and they have less expenditure on temporary accommodation (putting the homeless in hotels and rented rooms), which is ten times more expensive than building a house that may last 100 years or more.

Councils must be allowed to borrow at low interest rates. Rates have been historically low since 2008 (although they are now set to rise).

Local Government could borrow from Central Government. It is irrational that Government should have to borrow at high rates from commercial banks, given that those banks only exist because of the £100 billions of money given to them in an unplanned situation by Government. Just as Government produced that money by Quantitative Easing in order to keep the banks alive, so also they can produce money by Quantitative Easing to keep people and communities alive and healthy. QE, like borrowing, is acceptable so long as it is carried out as a wise investment, on the expectation that it will generate more money in the future.

More information on the way money is created is available here, and on the Positive Money website.

So, in short, it is the duty of Government to make sure that all people have basic security. Housing is one of those securities. Government has been failing in its duty, and must rectify its provision of housing. There are many low cost ways of providing accommodation for rough sleepers. The provision of a new wave of Council housing depends on councils being allowed to borrow at low rates of interest, and one way of providing this money is by Quantitative Easing. 

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